Wall Street stocks snapped a three-session losing streak on Tuesday as oil prices fell to three month lows and the Federal Reserve kept interest rates on hold for a second straight meeting.

The move by the Federal Reserve’s Open Market Committee to keep its benchmark interest rate at 2 per cent was widely anticipated.

Brett Hammond, chief investment strategist at TIAA-CREF, the financial services company, said: “Everyone expected the Fed to do what it did the only question was how much dissent would there be? I think that the dissent was less than expected, the Fed did what it was supposed to and then oil came in and gave markets a boost.”

The day began in positive fashion after some estimate-beating results from Procter & Gamble cheered investors.

The consumer products group behind Head & Shoulders shampoo, said fourth-quarter profits had jumped 33 per cent to $3.02bn as it passed on rising input costs to customers and benefited from the weak dollar which boosted foreign revenues. Proctor & Gamble shares rose 3.3 per cent to $67.97.

A drop in the oil price below $120 a barrel helped the equity market shrug off news that services industries in the US shrank for a second straight month in July.

The consumer discretionary sector was among the leading gainers, adding 4.5 per cent with retailers making particularly strong progress after some data showed strong year-on-year same store sales last week.

Macy’s surged 8.9 per cent to $19.49 and Sears Holdings rose 10.6 per cent to $91.56. 

Industrials and consumer staples also made ground adding 3 per cent and 2.2 per cent, respectively.

FedEx added 6.8 per cent to $83.99 and General Electric rose 3.8 per cent to $29.25 while Wal-Mart Stores rose 3.3 per cent to $60.34 and Tyson Foods gained 7.8 per cent to $16.16.

Oil is now down nearly 20 per cent from its high on July 3. As oil has pulled back, energy stocks have suffered. On Monday, the S&P 500 energy sector dropped into bear market territory after declining more than 20 per cent from its record highs in May.

But energy and material stocks made ground on Tuesday in spite of falling commodity prices.

Refiners Tesoro and Sunoco rose 5.3 per cent to $41.89 and 4.1 per cent to $15.53, respectively, helping the energy sector to a 1.1 per cent gain.

In materials, a rebound in metals stocks pushed the sector up 1.3 per cent. US Steel rose 2.4 per cent to $143.17, Allegheny Technologies added 4.8 per cent to $45.89 and Titanium Metals gained 7 per cent to $10.68.

All 10 leading industry groups closed in positive territory helping the benchmark S&P 500 advance 2.9 per cent to 1,284.88 points. The Dow Jones Industrial Average gained 2.9 per cent to 11,615.77 The Nasdaq Composite added 2.8 per cent to 2,349.83.

On Monday, equity markets declined for a third straight session as a broad slide in commodity prices helped some stocks but hurt the heavily weighted energy and materials sectors.

About 80 per cent of S&P 500 companies have reported in this earning season and, on average, profits have declined about 19 per cent.

On Tuesday, investors were presented with a mixed set of earnings reports. In addition to results from P&G, DR Horton also reported earnings. The largest US homebuilder reported a fifth straight quarterly loss and the shares dipped 0.3 per cent to $11.19.

Archer Daniels Midland, the grain processor, said fourth-quarter profit dipped 61 per cent missing analyst estimates. The shares fell 5.6 per cent to $25.87.

Tenet HealthCare also lost ground, losing 8.2 per cent to $5.72 after it reported a bigger-than-expected second-quarter loss but the healthcare sector as a whole gained 2.6 per cent nonetheless.

Financials regained some ground, adding 5.1 per cent as oil prices slipped back.

Lehman Brothers surged 12.8 per cent to $20.24, Citigroup added 5.8 per cent to $19.92 while JP Morgan advanced 4.4 per cent to $41.89.

AIG was among the leading gainers, adding 12 per cent to $29.89 after analysts at UBS recommended that investors buy shares in the insurer saying it was “well-positioned” to absorb losses from credit-related assets.